Partnership will revitalise power sector - Prime Minister
By Terrence Esseboom
TWO exhausted, but equally happy partners Friday night formalised the historic electricity deal to privatise the Guyana Electricity Corporation (GEC) now officially renamed the Guyana Power and Light (GPL) Incorporated. The Government and the foreign consortium, Commonwealth Development Corporation/Electricity Sector Board International of Ireland (CDC/ESBI), ratified 59 legal documents, totalling some 2,000 pages Friday night to seal the compact. Among their tasks Friday, the Government and the consortium completed arrangements for miscellaneous agreements, resolutions, legal consent orders and registered the new power entity. They also had to ensure the Public Utilities Commission (PUC) Act and the Electricity Sector Reform Act (ESRA), which regulate operations in the power sector, came into force. The ratification was completed late Friday night. "The transaction was long and exhaustive (but) time was needed to build common understanding," Mr John Aldridge, Manager, Power of CDC said. "It was a load on my shoulders" to get the power sector modernised, Prime Minister Sam Hinds said, referring to the strategic alliance Guyana clinched with the overseas conglomerate. The new partnership, Hinds said, will further revitalise the recuperating local power sector. "It's good that it's over...it's been quite a long day," a relieved Mr Winston Brassington, Head of the Privatisation Unit, told the Chronicle after the formalities ended at Le Meridien Pegasus Hotel, Kingston, Georgetown. Prime Minister Hinds, and representatives of the foreign joint venture consortium, Aldridge, Mr Mike Hogan, and Mr John Lynn, appended their signatures to the final papers to loud applause from the sizeable audience which included members of the diplomatic community, the local business sector, senior government functionaries and consumer advocates. CDC/ESBI with a US$23.45M offer, won the bid for the take-over of the local electricity enterprise. The pact includes a number of incentives for GPL to improve service standards, and requires the management team of 14 overseas CDC/ESBI specialists brought here, to undertake training of the local staff in a variety of utility operations. Among the terms of the agreement, GPL is to offer five per cent of its common shares under a `Private Placement' to local public and private institutions. This will take place in the first two years after sealing the of the deal. Within five years, "a further 15 per cent of the common shares of GPL are to be offered to the public in an Initial Public Offering (IPO)," the `Deal Summary' explained. It said too, that employees of the power utility can own a stake in the new entity through the IPO. A 10-year management contract is also part of the arrangement reached between the government and CDC/ESBI. In the first four years, some US$3.66M in fees will be paid annually to the 14 company officials running the power company. Thereafter it will be US$2.5M per year. "The management fee covers the cost of an expatriate...team and ongoing access to the technical and administrative capabilities of ESBI's domestic and international operations," the summary stated. The new company will not be given tax holidays and will pay income tax at the rate of 35 per cent. It will also pay property tax, but the rate "will not be increased over current levels." GPL will not be liable to pay other taxes and duties except "that after five years, it may be required to pay a consumption tax on fuel at a rate not to exceed 10 per cent," the document said. "The deal...reflects a balance of the needs of government, CDC/ESBI as investors, and GPL's present and future needs," a public relations statement said. Mr Noel Hatch, Chief Executive Officer (CEO) of GPL in a brief overview of their work promised reliable power supply and stable voltage frequency in the forthcoming days. Hatch also disclosed that GPL will enhance its meter- reading capability, the billing and debt collection process, and improve customer service standards through an "open, constructive and partnership approach," with Guyanese. Seeking to relieve lingering anxieties among skeptics, Hinds assured that the transaction is "not a sign of defeat or loss (to the nation) but a great stride," that gives some confidence that global economic uncertainties "will not wipe us out." "If we feel that rates are unjust, then we are prepared to oppose...to struggle to have an equitable rate. If rates are legitimate, then we are going to support it; if it is not, that's another thing. The consumer movement in Guyana is not going to be cowed or give way to anything," a well-known consumer advocate who requested anonymity, told the Chronicle. High rates help erode the national standard of living and stymie economic development which depends "largely on power," the consumer advocate explained. "With high cost power, we cannot compete on the international market... We need manageable and economic rates to make our industries profitable and competitive, the source said. Nevertheless, the local organisation "welcomes" the new company and is prepared to support its efforts, the consumer protagonist said.
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